Hoping to clear February salaries before Holi, cash-starved Chandigarh MC mulls taking ₹50 crore loan
The Chandigarh MC had been banking on the administration for additional grants as Punjab governor and UT administrator Gulab Chand Kataria on February 22 assured to transfer surplus funds from UT’s annual budget for FY 2024-25 to the civic body after the Centre’s approval.
Hoping to pay the February salaries of its employees before Holi, the cash-strapped Chandigarh municipal corporation (MC) is considering taking a ₹50 crore loan. This is for the first time in the civic body’s history that it is having to take loans to pay salaries to its employees.
The MC had been banking on the administration for additional grants as Punjab governor and UT administrator Gulab Chand Kataria on February 22 assured to transfer surplus funds from UT’s annual budget for FY 2024-25 to the civic body after the Centre’s approval. While Kataria had said that any announcement or allocation of funds will likely be made around March 15, the MC has not got any confirmation as of now. Thus, it is considering taking a loan as a last resort.
The MC has already initiated talks with government institutions and agencies, including the Chandigarh Housing Board, and banks to secure loan at the lowest possible interest rate. According to MC officials, loans from government institutions could entail around 8% interest, while some banks may offer cheaper rates. MC may also have to pledge collateral, any property or asset, against the loan.
Municipal commissioner Amit Kumar said, “We wish to disburse the pending salaries to the staff before Holi. The MC is now exploring the possibility of taking around ₹50 crore loan for a month, at the lowest possible interest rate, which we plan to repay once the grant-in-aid for the fiscal year 2025-26 starts is disbursed in April. While the loan may provide temporary relief, the MC will undoubtedly require additional financial support from the Centre and the Chandigarh administration to manage its mounting liabilities.”
With mounting liabilities, the MC has failed to disburse salaries to its regular employees on time. Typically paid by the 30th or 31st of each month, February salaries have still not been paid. The MC employs 9,748 personnel, including 6,965 outsourced workers. Of its monthly expenditure, ₹26 crore is allocated for outsourced staff wages, while ₹16 crore is required for regular employees. The salaries of outsourced staff, usually disbursed by the 7th of each month, remain unpaid as well.
Apart from salaries, the MC is also struggling to meet other financial obligations, including pensions, utility bills, maintenance work, and fuel expenses. Development projects in Chandigarh have remained stalled since May 2024, with no new tenders floated since then.
The MC has been seeking an additional grant of at least ₹170 crore for months, but approval is still pending. During the mayoral polls on January 30, BJP president Jatinder Malhotra had announced, following Harpreet Kaur Babla’s victory, that the Centre had approved a special grant of ₹92 crore for the MC. However, the civic body has yet to receive any funds, further compounding its financial woes.